Thursday, December 6, 2007

How Much Should You Pay? Costs You Can Avoid

When buying a car there are always those extra charges that jack up the cost of your new wheels. The good news is that some of these costs are avoidable. The not so good news is that you can't avoid 'em all.

You probably can't avoid the following costs, but you can make sure they're reasonable.


  • Sales tax (varies by state)

  • Licensing & registration fees (call your state's department of motor vehicles for the right dollar amount)

  • Destination charge (usually $400 to $450)


  • Documentation fee: reasonable amount is $50. $250 is not, according to experts Greg Anderson and Ingrid Loeffler Palmer at Edmunds.com.

  • Advertising fee: This is a legitimate fee, according to Fighting Chance founder James Bragg.

    Dealers must chip in to pay for regional television ads, so they pass the cost on to the buyer. However, the experts at Edmunds suggest you not pay more than one percent of MSRP, or $200, whichever is less. Certainly don't pay more than two percent.

  • Emission fees (About $100 retail)



Try to avoid the following costs. You shouldn't pay for:


  • Extended warranties: Buy a car with a good service history. In many cases, filing a claim and receiving reimbursement or payment is just too much of a hassle. See the FTC article on extended warranties.

  • Dealer prep: The car dealer is already getting paid a fixed amount by the factory to prepare the vehicle for sale, according to Mark Eskeldson, author of What Car Dealers Don't Want You to Know.

  • Credit insurance (to pay off your car loan should you die.) ""You don't need it if you have life insurance,"" says Jean Ann Fox, director of consumer protection at the Consumer Federation of America.


Moreover, Edmunds experts Greg Anderson and Ingrid Loeffler Palmer strongly suggest you also avoid:


  • Delivery and handling charges (D&H) -- "nothing more than added dealer profit"

  • Fabric coating -- "Do your own with a $5 bottle of Scotchgard"

  • Teflon coating -- "No longer needed because of clearcoat paint used on cars today"

  • Rustproofing -- "It is unnecessary and can harm your car. You're adding weight, which increases gas mileage, and it can void your warranty in some cases."


No comments:

Post a Comment